A Wikipedia contributor wrote that Bumfuck Egypt was coined as a reference to Cairo Illinois - which is a relatively remote river town in Southern, Illinois.
"BFE or Bumblefuck, Egypt (also Bumfuck, Egypt, Butt Fuck, Egypt, or Beyond Fucking Egypt) refers to an unspecified remote location or destination, assumed to be arduous to travel to, unpleasant to visit and/or far away from anything of interest to the speaker (e.g. "Man, you parked way the hell out in BFE"). In Southeastern Pennsylvania and New Jersey, this is often referred to as Japip or East Jabip/Jabib. In the Chicago metropolitan area, the term was coined to refer to the region in downstate Illinois known as "Little Egypt", centered in Cairo, Illinois, for being the furthest from the urban center in both distance and way of life. Bumfuck is also military slang for a remote, hard to get to military base. Has been also rendered as Bumfuck, Iowa or Bumfuck, Wyoming or Bumfuck, Idaho. Bumblefuck, Missouri was popularized by the 1988 movie Rain Man."http://en.wikipedia.org/wiki/Placeholder_name
Personally, I think that it is more likely that it was a variation of Timbuktu - which has a long history as a placeholder name - and shares many sounds in common with Bumfuck.